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Local government pensions schemes have deficit of £54bn, say TPA

Council pension schemes in the UK have a combined deficit of £54bn despite £1 in every £5 of Council Tax being spent on employer contributions, according to new research from the TaxPayers’ Alliance.

A new report from the right leaning think tank claims the £54bn deficit in 2010-11 fell from £91bn in 2009-10 which it says was “a particularly bad year” for local government pension funds. It adds that even after that recovery, it has still risen from £51bn in 2008-09.

TPA director Matthew Sinclair says: “This is a ticking time bomb being left for future generations of taxpayers to deal with. With an ageing population and a crisis in the public finances, generous final salary schemes like the LGPS are inflexible and too expensive, and need urgent reform. Councils should not take false comfort in the improvement in the stock market. Their pension liabilities continue to far outweigh their assets and the situation remains worse than two years ago.”

The report says Birmingham City Council had the biggest deficit at £1.3bn, 14 authorities had deficits over £500m and 165 had deficits in excess of £100m.  One sixth of the total deficit, some £9bn, is accounted for by London’s 32 borough councils, the City of London and the Greater London Authority.

Local government minister Bob Neil says the report reinforces the need for reform of the schemes. He says: “Thanks to Labour’s failure to reform, the cost of town hall pensions has trebled since 1997. These pension bills are costing over £300 a year to every family and pensioner paying council tax, diverting funds from emptying bins, cleaning the streets and keeping council tax down.

 “Hard-pressed taxpayers simply cannot afford to foot an ever-growing bill. This is why this Government is taking action to reduce the massive and unsustainable cost of state sector pensions.”



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  1. Terry Mullender 13th April 2012 at 9:18 am

    And still the LGPS is accepting transfers in from other DB/DC Schemes, how can this be justified?

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